IN THE MATTER OF THE COMPLAINT FOR DISBARMENT OF ATTORNEY POTENCIANO A.

PALANCA. WILLIAM C. PFLEIDER, complainant, vs. POTENCIANO A. PALANCA, respondent.

FACTS:

The respondent Atty. Potenciano A. Palanca was for sometime the legal counsel of the complainant
William C. Pfleider.

At all events, the relations between the two must have attained such a high level of mutual trust that on
Pfleider and his wife leased to Palanca a 1,328 hectare agricultural land in Hinobaan, Negros Occidental,
known as the Hacienda Asia, for a period of ten years. In their contract, the parties agreed, among others,
that a specified portion of the lease rentals would be paid to Pfleider, and the remainder would be
delivered by Palanca to Pfleider's listed creditors.

The arrangement worked smoothly until the rupture came with the filing by Pfleider of a civil suit (civil
case 9187 of the CFI of Negros Occidental) against Palanca for rescission of the contract of lease on the
ground of alleged default in the payment of rentals. In his answer to the complaint, Palanca averred full
satisfaction of his rental liabilities, and therefore contended that the lease should continue.

With this history in, perspective, we shall now consider the administrative charges of gross misconduct in
office brought by Pfleider against Palanca. The indictment consists of four counts.

1 Pfleider instructed Palanca to offer in settlement the sum of P10,000, payable in installments, to Uy
Matiao for the dismissal of the estafa case. After sometime, Palanca reported to Pfleider that the offer has
been rejected. It turned out, charged the complainant Pfleider, that Palanca had not deposited the sum of
P5,000 with the Dumaguete City Court, let alone communicated to Uy Matiao his earlier offer of
settlement.

2 Palanca had fraudulently charged the sum of P5,000 (which he supposedly had left with the City Court
in Dumaguete) to his rental account with Pfleider as part payment of the lease rentals of the Hacienda
Asia. 

3 In the same statement of account, Palanca falsely represented having paid, for the account of Pfleider,
one Samuel Guintos the sum of P866.50 when the latter would swear that he had received only the sum
of P86.50.

4 It is charged that the list of creditors which Pfleider had "confidentially" supplied Palanca for the
purpose of carrying out the terms of payment contained in the lease contract was disclosed by Palanca, in
violation of their lawyer-client relation, to parties whose interests are adverse to those of Pfleider.

ISSUE: Whether or not there is a breach of fidelity owing from a lawyer to his client. [NO]

RULING:
There is no substantial blame against Palanca inasmuch as the latter’s services were implicitly terminated
by Pfleider when he sued his lawyer. While the object of the suit is the rescission of the lease contract,
the conflict of interest became incompatible with the mutual confidence and trust essential to every
lawyer-client relationship.

Pfleider delivered the list of his creditors to Palanca not because of the professional relation then existing
between them, but on account of the lease agreement.

A violation therefore of the confidence that accompanied the delivery of that list would partake more of a
private and civil wrong than of a breach of the fidelity owing from a lawyer to his client.
Moreover, Pfleider fails to controvert Palanca's claim that there is no such thing as a "confidential" list of
creditors and that the list of creditors referred to by Pfleider is the same list which forms part of the
pleadings in civil case 9187 (the action for rescission of the lease contract) now, pending between the
complainant and the respondent lawyer, and therefore is embraced within the category of public records
open to the perusal of persons properly interested therein.

In sum, we are satisfied, and we so hold, that nothing in written complaint for disbarment against Palanca
and in his reply to Palanca's answer supports a  prima facie finding of such misconduct in office by
Palanca as would warrant further proceedings in this case.

ACCORDINGLY, the complaint is hereby dismissed.